JP Morgan stock downgraded by MKM Partners

Equity research firm MKM Partners has downgraded JP Morgan Chase & Co. to Neutral from Buy

MKM Partners –an equity research firm has downgraded the stock of JP Morgan Chase & Co. from Buy to Neutral. David Trone analyst of MKM Partner assigned a new stock price target of $65.it is supposed that the company is fully valued currently and any higher valuation cannot justify the value.

Since JP Morgan stock is highly liquid, shareholders are suggested to buy the stock if there is an upside of 15%. A price target of $75 by May 2016 can allow buying the company stock. This will mean 1.2x of P/B multiple. On this theoretical target price, the company will be providing return on equity of 12%.

The analyst thinks that the stock of the company is gaining momentum at the moment; Mr. Trone stated that the stock is accurately valued as it has gained 13% in the last three months. “We don’t doubt that the momentum trade could push the stock higher to levels that, based on our analysis, are simply unwarranted,”

JP Morgan is most likely to be an excellent company with ranks amid the finest in every business. Instead, if capital side impacted the returns, a pullback is unavoidable and the sustained $65 estimate a share can be dropped.

In a Normal Bear Case, the sell side firm sees a 15% decline in the coming twelve months. It places out its price target risk on Citigroup Inc., JP Morgan Chase &Co, and Bank of America. “The Value Ratios for JP Morgan and Citigroup are at equilibrium, while Bank of America’s assumes some normalization of mortgage put-back costs. Should the global economy falter somewhat, current ROEs could fall, necessitating a drop in the multiples,”

In a recent report, Reuters suggested that JP Morgan is determined to raise its equities market share. Both JP Morgan and Citigroup are competing to exploit on heightened volatility. Michael Wilson, Europe, Middle East and Africa head of JP Morgan said that the bank is ready to introduce its new equity products.

As per Bloomberg data, most of the analysts covering the company have bullish view on the stock. Out of 41 almost 31 rated the stock as Buy, however online 9 gave Hold rating with no Sell rating. The twelve month average stock price target is $70.21 on the stock of JP Morgan.

In sell side update, lately, Susan Roth Katzke of Credit Suisse restated an outperform rating with $75 of price target on company’s stock. John E McDonald of Sanford C. Bernstein &Co. also gave outperform rating with $70 price target.

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